AT&T Buys Cable Giant TCI

NEW YORK: At a little over $50 a share, AT&T is paying top dollar to drive Tele-Communications Inc.'s cable wires into local phone markets. That's 40 percent over what TCI stock was before the
rumors of the deal started flying. AT&T is even soaking up TCI's $11
billion in debt along with the $37 million it's paying for the cable
business -- but it's worth it, says TIME Wall Street columnist Daniel
Kadlec: "AT&T needed this. It gives them a way to get into the local phone market that they couldn't figure out before -- and spares them the antitrust uproar that would have come if they had bought back a Baby Bell."

The move isn't risk-free, of course. AT&T has a
habit of buying things just to keep up with the Joneses. It swallowed NCR to get into computers, which was a disaster. But Kadlec says the
TCI purchase simply extends the company in a natural direction -- allowing it to re-enter the lucrative local phone market that it once dominated. "AT&T has finally solved a strategic problem that brought down its last two CEOs," said Kadlec. Whatever happens, TCI stockholders ought to be happy today: Shares jumped another $4 to $42 on Wednesday's confirmation of the deal.